Global Trends Review, August 19 – September 01, 2013: European pellet prices growing, wood trade in Egypt not impacted by tensions

Pellet output in Germany in the first half-year amounted to 1.073 million tonnes (+2.7% year-on-year), Holzkurier said quoting German energy wood and pellet association (DEPV). Sawmill residues were the main raw material source for the pellets production (86%), 93% were made from softwoods. The industry sold 81% of the pellets loose and 19% in sacks. 90% of the pellets produced in the country now carry the ENplus seal which was launched a few years ago. Rising procurement costs for sawmill residues made pellet producers increase prices in July and August, EUWID said. Trade prices were up by €5-8/t.

German lumber industry is suffering from high softwood log prices which are 50% above international price levels, the German Sawmill and Wood Industry Association DeSH said in its half-year report. Margins for glue-laminated timber and structural finger-jointed timber (KVH) are reduced to a minimum. By late June, sales were still 2.4% below last year’s figures. Nevertheless, the German lumber industry considers itself to be well-positioned on the European scale. Despite the financial crisis, it has achieved a positive foreign trade balance for softwood lumber.

At the same time, CEO of the Bavarian State Forests Dr. Rudolf Freidhager said that the state company wants to raise log prices by €2-3/m3 to €112/m3 ex-works (€100 ex-forest road). Whereas lumber production in Austria has been declining for many years, it has steadily been growing in Bavaria. “We plan to harvest over 3 million solid m3 of softwood logs again. Harvest volumes for spruce must once more be reduced by 50,000 to 60,000 m3 for silvicultural reasons. We are fully exhausting our possibilities on the softwood side”, Freidhager said. The company managed to reduce harvesting costs from around €22/m3 in 2005 to around €16/m3 now. “Our transparent tendering process was a key factor in that”, he says. Company’s own machinery resource is being reduced considerably.

Carlyle Group announced that it acquires Klenk Holz AG, a German manufacturer of wood products, from a trust of German banks. Capital for this investment comes from Carlyle Strategic Partners (CSP), which manages over $2 billion across three funds and focuses on middle market distressed and special situation investing, with an increasing focus on Europe. Further terms of the investment were not disclosed.

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Fears by Central and Northern European consignors that political tensions in Egypt could have a negative influence on business activity on the Egyptian softwood-lumber market and generally have a detrimental effect on business activity in the Levant and the Near East have up until the end of August not been justified, EUWID Wood Products reported. Individual consignors are even reporting that business transactions have shown noticeable stabilisation following the takeover of government business by the Egyptian military. Apparently, current contracts are being called off as planned by Egyptian importers, and arriving ships are being promptly unloaded. Apart from the largely smooth processing of incoming ships, the provision of letters of credit and invoice processing have apparently also improved.

From the perspective of European softwood-lumber exporters, the civil war in Syria has also not resulted so far in any negative effects on softwood-lumber sales in the region. Syria sources most of its lumber from Russia and CIS states and from the point of view of European consignors had already been an insignificant sales market before the start of the civil war.

The survey of more than 400 wood manufacturers in United Kingdom found total orders at their highest since August 2011. Companies predict an even greater upturn in the coming three months, TTJ said. Construction Products Association has also recently been awarded funding to help companies tap export markets. The project reflects the Association’s commitment to the recently announced Industrial Strategy for Construction, which has as one of its objectives a 50% reduction in the trade gap between total exports and total imports for construction products and materials.

Brookfield Asset Management Inc. held the final close on Brookfield Timberlands Fund V L.P. with equity commitments totalling $1 billion, creating a global fund that will invest in timberlands, primarily in the U.S., Brazil and Australia and may also pursue opportunities in Canada, Chile, Uruguay and New Zealand.

Metsä Fibre increased prices of Botnia Nordic Pine and Botnia Nordic Strong (NBSK pulp grades) in Europe and China, effective September 1, 2013. The new price in Europe is $880 per tonne, CIF Metsä Fibre’s frequently used European ports of destination. The new price of Botnia Nordic Pine is $710 per tonne and Botnia Nordic Strong $720 per tonne in China. At the same time, Sodra announced similar price hike from 1 September 2013: for European consumers the price will also reach $880 per tonne. Sodra management believes that the global market balance for bleached softwood kraft pulp was good during the summer months and expects that it will continue to improve in the autumn.

South Korea’s trade commission said it has decided to levy anti-dumping tariffs on imported Chinese plywood as the importers were underselling their products, ITTO reported. The decision by the Korea Trade Commission will impose punitive duties of 2.42% to 27.1% on Chinese plywood sold here, it said. Whether to actually impose anti-dumping duties will be decided by the finance ministry. South Korea’s plywood market reached 650 billion won ($58 million) in 2012. Local firms took up 27% of market share, while Chinese companies accounted for 38%.

FPInnovations has made a surprising discovery: wet sawdust can explode just like dry sawdust. Until now, it was thought that only dry sawdust had the potential to cause explosions. In the recent years, two accidents killing four workers happened at Canadian mills. After that, companies started to invest largely in misting equipment.

Total amount of paper collected and recycled in the paper sector remains stable at just under 58 million tonnes. The European Recovered Paper Council (ERPC) reported a 71.7% paper recycling rate for the year 2012 across the countries where its members are active. Altogether, 13 European countries reached a recycling rate of over 70% last year, while the number of countries where less than 60% were recycled decreased from 12 to 10 compared to 2011, the organisation announced.

Swedish pulp manufacturer Rottneros, part of the Arctic Paper group, has once again confirmed its decision to continue producing groundwood pulp at the Rottneros mill. According to the company, a series of new groundwood pulp products has been developed at the mill, resulting in increased demand. Especially the groundwood pulp type developed for customers in the virgin-fibre and recycled cartonboard business proved to be successful, the company explained.

WhatWood’s reviews are prepared using corporate press releases, Holzkurier, Timber Trades Journal, Fordaq, EUWID Wood Products, ITTO, ForestTalk, and EUWID Paper.